Government to press ahead with whiplash crackdown
The government is pushing ahead with a crackdown on the compensation culture which has led to an ‘epidemic’ of whiplash claims.
Justice Secretary Liz Truss has published a consultation which outlines plans to either ban minor whiplash claims or limit payments to just £425.
The government is also planning to ban insurers from settling claims without medical evidence supporting the evidence of injury, while setting payouts at £1,100 for injuries that take 12 months to heal and £3,500 for injuries lasting more than two years.
It is estimated that these measures will save £1bn a year, which insurers have pledged to pass on 100% to motorists in the form of cheaper premiums.
The Justice Secretary said, ‘For too long some have exploited a rampant compensation culture and seen whiplash claims as an easy payday, driving up costs for millions of law-abiding motorists. These reforms will crack down on minor, exaggerated and fraudulent claims. Insurers have promised to put the cash saved back in the pockets of the country’s drivers.’
A new whiplash claim is made every single minute in the UK, rising from 190,000 claims in 2005/06 to 770,000 last year, when the average payout was £1,850.
The Association of British Insurers (ABI) has welcomed the announcement. It said, ‘The insurance industry has campaigned long and hard to tackle the impact of whiplash-related claims on honest motorists, so we welcome these proposals. Introducing a range of measures, such as limiting the compensation payable for these injuries, will help create a more honest system that doesn’t reward those who want to exploit it.’
George Osborne, the former Chancellor, originally proposed a crackdown on whiplash claims in November last year, but the EU referendum saw the plan put on the backburner.